Key Takeaways
- An SEC report said that Gary Gensler’s official text messages were lost for nearly a year due to avoidable IT errors.
- The missing communications overlap with the height of the MMTLP market scandal, when retail investors alleged manipulation.
- While the SEC fined financial institutions for failing to preserve communications, its inability to safeguard its own records has sparked criticism.
The Securities and Exchange Commission (SEC) has admitted that nearly a year of text messages from former Chairman Gary Gensler’s government-issued phone were lost during a critical period coinciding with the MMTLP market scandal.
A recent watchdog report revealed the missing records resulted from “avoidable” technology failures by the SEC’s Office of Information Technology (OIT).
On September 30, Republican leaders of the House Financial Services Committee sent a letter to the SEC demanding answers over the loss.
Lawmakers Demand Answers
In the letter, addressed to SEC Chair Paul S. Atkins Atkins, the lawmakers cited “failures in oversight, recordkeeping, and potential special treatment” that they said raised questions about the agency’s credibility.
“The Committee is concerned not only that OIT would implement a policy that was ‘poorly understood,’ but also that it appears former Chair Gensler may have been accorded special treatment,” the lawmakers wrote.
They also criticized the agency’s handling of the data, highlighting that nearly a year’s worth of messages was permanently deleted after a factory reset.
“This data loss was due to the fact that OIT had not backed-up former Chair Gensler’s device since October 18, 2022,” the letter said.
The letter urged further investigation by the SEC’s inspector general and warned that the episode raised “serious concerns” about former Chair Gensler’s compliance with federal recordkeeping laws.
How Did The SEC Lose Gensler’s Texts?
According to the SEC’s report, on September 3, agency staff mistakenly flagged Gensler’s mobile device as inactive and implemented an “enterprise wipe.”
Because the device had not been backed up for almost a year, this action erased stored text messages and operating system logs.
When staff later attempted to undo the damage, they reportedly ran a factory reset and accidentally permanently deleted the messages, along with crucial system data.
“Although the SEC took steps to recover or recreate the deleted text messages, the agency was unable to collect or determine the entire universe, including some federal records,” the report noted.
Crackdown on Communications
The revelation comes as Gensler was leading a broader investigation into the deletion of off-channel communications by Wall Street firms.
The SEC has imposed fines totaling up to $2 billion on financial institutions that failed to preserve messages, citing the importance of maintaining investor trust.
“Finance, ultimately, depends on trust. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” Gensler said at the time.
“Since the 1930s, such recordkeeping has been vital to preserve market integrity,” he added.
Accusations of a Double Standard
Critics argue the SEC’s inability to preserve its own chairman’s communications has undermined its credibility.
While the agency penalized banks and brokerages for communication lapses, it ultimately failed to safeguard its own federal records.
This gap in Gensler’s messages is particularly troubling because it overlaps with the height of the MMTLP controversy.
During that time, thousands of retail investors raised concerns over trading halts, alleged market manipulation, and a lack of regulatory oversight surrounding Meta Materials’ preferred shares (MMTLP).
Observers claim the missing texts may have provided insights into how the SEC responded to investor complaints or whether internal discussions addressed the unfolding scandal.
The disappearance of these records has fueled speculation that potentially vital evidence may never be recovered.
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Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
